JALPA UTTAPAL PATEL,AHMEDABAD V. THE PR.CIT, AHMEDABAD-1, AHMEDABAD

ITA 720/AHD/2025

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The case revolves around an appeal by Jalpa Uttapal Patel against the revision order passed by the PCIT, Ahmedabad-1, concerning the assessment year 2018-19. The PCIT had exercised revision jurisdiction under section 263 of the Income Tax Act, 1961, claiming that the Assessing Officer (AO) had erred in not adding a sum of Rs.6,61,49,926 as bogus purchases in the assessee's income. The AO had previously reopened the assessee's case based on information suggesting undisclosed transactions and, after examination, accepted the assessee's returned income, finding the purchases genuine. The Tribunal held that the PCIT's revision was not warranted as the AO had conducted a thorough investigation and was satisfied with the assessee's explanations and evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822666 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 03-04-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHER SINGH
• Assessee Lawyers: BIREN SHAH
• Keywords: Bogus purchase; Bogus
• Section: 263; 69C

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0012ायपीठ “डी“,अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD \u0016ी संजय गग\u001b, \u0012ाियक सद एवं \u0016ी मकरंद वसंत महादेवकर, लेखा सद क े सम\"। ] ] Before Shri Sanjay Garg, Judicial Member And Shri Makarand V. Mahadeokar, Accountant Member आयकर अपील सं /ITA No.720/Ahd/2025 िनधा \u000fरण वष\u000f /Assessment Year : 2018-19 Jalpa Uttapal Patel N Y Steel Corporation 6 Puja Apartment Vrundavan Colony Opp. Sardar Patel Hospital Maninagar Ahmedabad – 380 008 बनाम/ v/s. The Pr.CIT Ahmedabad-1 Ahmedabad – 380 015 \u0013थायी लेखा सं./PAN: BAXPP 4020 K (अपीलाथ%/ Appellant) (&' यथ%/ Respondent) Assessee by : Shri Biren Shah, AR Revenue by : Shri Sher Singh, CIT-DR सुनवाई की तारीख/Date of Hearing : 30 /09/2025 घोषणा की तारीख /Date of Pronouncement: 23/12/2025 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the revision order passed by the Principal Commissioner of Income Tax, Ahmedabad-1 (hereinafter referred to as “PCIT”) dated 26/03/2025 u/s.263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year (AY) 2018-19. 2. The assessee, in this appeal, has contested the very exercise of revision jurisdiction by the Ld. PCIT u/s.263 of the Act. Printed from counselvise.com ITA No.720/Ahd/2025 Jalpa Uttapal Patel vs. PCIT Asst.Year : 2018-19 2 3. The brief facts of the case are that the assessee e-filed her return of income on 10/09/2018 declaring total income of Rs.9,70,330/-. The said return was processed u/s.143(1) of the Act. Thereafter, the Assessing Officer (AO) received information on insight portal and as per the said information, it was found that the assessee had carried undisclosed transactions to the tune of Rs.1,84,15,750/- in the form of bogus purchase and sale from M/s. Kapishwar Steels in the year under consideration. On the basis of said information, the assessment in the case of the assessee was re-opened u/s.147 r.w.s.148 of the Act. 3.1. During the course of assessment proceedings, the assessee explained that, in fact, the assessee had made purchases from M/s. Kapishwar Steels amounting to Rs.6,61,49,926/- and not just of Rs.1,84,15,750/-. The assessee was asked to explain the genuineness of the purchases, whereupon, the assessee furnished computation of income, financial statements, reply and audited balance-sheet and other relevant details. The assessee further filed confirmation of accounts from M/s.Kapishwar Steel along with bank statement highlighting the payment, purchase ledger and other relevant details. The assessee also filed copy of GST return. The AO, after perusal of all the record and relevant details, found that the assessee had duly disclosed the aforesaid purchases and even has proved the genuineness of the purchases. He, accordingly, accepted the returned income of the assessee without making any addition. 3.2. Thereafter the Ld. PCIT exercised his revision jurisdiction u/s.263 of the Act. The reasoning given for the exercise of revision jurisdiction, has been mentioned in para 2 of the impugned order of the Ld. PCIT, which for the sake of ready reference, is reproduced as under: Printed from counselvise.com ITA No.720/Ahd/2025 Jalpa Uttapal Patel vs. PCIT Asst.Year : 2018-19 3 “2. On perusal of records, it is seen that the assessee has stated that it has executed total transaction of Rs.6,61,49,926/- instead of Rs.1,84,15,750/- with M/s.Kapishwar Steel. Though a show cause notice was issued for making addition of Rs.6,61,49,926/- under section 69C of the Act, the A.O. has accepted income declared in the ITR, without making any addition. Therefore, the order of the A.O. was found erroneous and prejudicial to the interest of the Revenue.” 4. Similar reasoning has been given by the PCIT in the show-cause notice issued u/s.263 of the Act, copy of which has been placed at page No.1 of the paper-book. The only reasoning given by the PCIT for exercise of revision jurisdiction in this case is that the case of the assessee was re-opened by the AO on the basis of information on insight portal that the assessee had made undisclosed/bogus purchase/sales transactions of Rs.1,84,15,750/-. Further that, during the assessment proceedings, it was disclosed by the assessee that the assessee had made total purchase of Rs.6,61,49,926/- from M/s. Kapishwar Steel. However, the AO had failed to add the sum of Rs.6,61,49,926/- as bogus purchases as the assessee had transacted with M/s.Kapishwar Steel. This reasoning given by the PCIT is neither justifiable nor sufficient for exercise of revision jurisdiction u/s.263 of the Act. Admittedly, in this case, the case of the assessee was re-opened as the Department had information that one M/s. Kapishwar Steel was indulged in bogus sales/purchase transactions. Since there was information to the Department that the assessee had also made transaction with M/s.Kapishwar Steel, therefore, the case of the assessee was re-opened to verify the genuineness of the said transactions. The AO show-caused the assessee in this respect, whereupon, the assessee furnished the relevant details to show that the transactions were done through banking channel. The confirmation from the concerned party was also filed. Purchaser register, details of opening & closing stock, etc. and even GSTR were also produced. The AO thoroughly examined the evidence furnished by the assessee and was Printed from counselvise.com ITA No.720/Ahd/2025 Jalpa Uttapal Patel vs. PCIT Asst.Year : 2018-19 4 satisfied that, in this case, the assessee had proved that it had actually carried purchase transactions from M/s.Kapishwar Steel and even had made corresponding sales and profit was offered for taxation. The AO being satisfied, did not find it a fit case for making any addition. Now, merely because no addition was made by the AO, that itself, cannot be a ground for exercise of revision jurisdiction by the Ld. PCIT u/s.263 of the Act. As per the provisions of section 263 of the Act, there are two pre-requisite conditions that must be satisfied to exercise revision jurisdiction u/s.263 of the Act by the CIT/PCIT: firstly, the order of the AO must be erroneous and secondly, it should be prejudicial to the interests of the revenue. For the exercise of revision jurisdiction u/s.263 of the Act, these two conditions should co-exist, if one of the conditions out of the aforesaid two conditions is missing, then the Commissioner cannot exercise his revision jurisdiction u/s.263 of the Act. 4.1. In the case in hand, merely because the AO did not make addition in the assessment order being fully satisfied from the evidences and explanations furnished by the assessee, that itself, does not make the assessment order erroneous or prejudicial to the interests of the revenue. The revision jurisdiction u/s.263 of the Act cannot be exercised merely on the basis of whims and wishes of the Commissioner. The AO, in this case, has made enquiries as were required and was satisfied with the submissions of the assessee. Merely because of the Commissioner thinks that the AO should have demanded more documents or evidences, that itself, does not make the order of the AO is erroneous if the enquiries conducted by the AO were reasonable, justifiable and adequate, which in ordinary course are expected from an Assessing Officer. The AO has not read the mind of the CIT/PCIT as to what the CIT/PCIT would further want him to do. Under the Printed from counselvise.com ITA No.720/Ahd/2025 Jalpa Uttapal Patel vs. PCIT Asst.Year : 2018-19 5 circumstances, the very exercise of revision jurisdiction by the Ld. PCIT u/s. 263 of the Act, in this case, is held as bad in law. 4.2. Even otherwise, the assessee has also produced the assessment order of the Proprietor of M/s. Kapishwar Steel, i.e. Rohit Mital HUF, wherein, the names of parties are mentioned with whom they have carried out bogus purchase transactions and the name of the assessee is missing in the said list. Moreover, it is not the case of the Revenue that the entire transactions carried out by M/s. Kapishwar Steel/Rohit Mital HUF were bogus. The bogus transactions of M/s.Kapishwar Steel have been taken @60% of the total transactions on estimation basis. Under the circumstances, it is not a case for exercise of revision jurisdiction by the PCIT u/s.263 of the Act. Therefore, the impugned order of the PCIT is not sustainable in the eyes of law and the same is hereby quashed. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 23 /12/2025. Sd/- Sd/- (Makarand V. Mahadeokar) Accountant Member ( Sanjay Garg ) Judicial Member िदनांक/Dated 23/12/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS Printed from counselvise.com ITA No.720/Ahd/2025 Jalpa Uttapal Patel vs. PCIT Asst.Year : 2018-19 6 आदेश की ितिलिप अ!ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\" / The Appellant 2. #थ\" / The Respondent. 3. संबंिधत आयकर आयु% / Concerned CIT 4. आयकर आयु% ) अपील ( / The CIT(A)/PCIT Ahmedabad-1 5. िवभागीय ितिनिध , अिधकरण अपीलीय आयकर , अहमदाबाद /DR,ITAT, Ahmedabad. 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स#ािपत ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (dictation pad is attached with the file)) : 11.12.2025 2. Date on which the typed draft is placed before the Dictating Member. : 11.12.2025/12.12.25/17.12.25 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 24/12/25 7. Date on which the file goes to the Bench Clerk. : 24/12/25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : Printed from counselvise.com "